'Smart' default enrollment policies under ACA can help consumers save, study finds



"Smart" enrollment can help consumers insured under the Affordable Care Act leverage savings, a new study has found. File Photo by John Angelillo/UPI | License Photo

July 16 (UPI) -- A "smart" default enrollment policy that automatically shifts low-income consumers to Affordable Care Act plans with discounted premiums, reduced deductibles and "generous" benefits would decrease monthly costs by more than $100, a study published Friday by JAMA Health Forum found.

The concept effectively leverages a provision under the American Rescue Plan, signed into law by President Joe Biden in March, which increases tax credit subsidies through 2022 to reduce marketplace plans' premiums for qualifying enrollees, the researchers said.

Because of the provision, under the Affordable Care Act, also known as Obamacare, a person earning 150% of the federal poverty level pays essentially pays nothing for a "silver" plan on the health marketplace, the researchers said.

Currently, though, consumers insured under the ACA who automatically enroll in the same health insurance plan at the start of a new year may unwittingly end up with coverage that costs more and provides fewer benefits.

Instead, their "smart" enrollment strategy would automatically enroll in a plan that provides the same benefits as their current one, at the same or lower cost, the researchers said.

"Life changes, policies change and choice changes, so a good choice this year [under the ACA] may or may not be your best choice next year," study co-author David M. Anderson told UPI in an email.

"The American Rescue Plan has upped subsidies for everyone, made zero premium plans available to more people with less cost-sharing -- active choice makes the possibility of a bad choice being made far lower," said Anderson, a researcher at Duke University in Durham, N.C.

Since July 1, unemployed people have been able to enroll in health coverage under the ACA with significant federal subsidies that could help lower premiums to as little as zero per month.

The change allows anyone who received or was approved to receive unemployment compensation for any week in 2021 to apply for subsidized coverage, at least through the end of 2022, according to Anderson and his colleagues.

However, even with increased subsidies, consumers who choose to automatically roll over their insurance plan from 2021 to 2022 could end up with a plan that costs more and provides poorer coverage, the researchers said.

This is because plans with the same name often change benefits, deductibles and co-pays from year to year, meaning consumers who think they are getting the same coverage at the same cost will actually pay more for less, they said.

The "smart" default concept, first proposed by the Hamilton Project in 2015, would mitigate this by allowing consumers enrolled in existing plans to "default" or opt into different existing plans during open enrollment based on cost and value.

In their analysis of nearly 750,000 ACA enrollees in California, nearly 6% under current policy would default into more expensive plans -- even with American Rescue Plan subsidies -- with "less generous" benefits, the data showed.

Of these enrollees, 98% would have incomes below 250% of the federal poverty level, the researchers said.

However, with a smart enrollment strategy, these same consumers would default to plans that save them, on average, $102 in monthly premium costs, nearly $2,000 in annual deductibles and almost $50 specialty prescription co-pays, they said.

"State and federal exchanges have significant data on individuals and households that are returning to the [ACA] marketplaces for 2022," Anderson said.

"They can leverage this data to help eliminate objectively bad choices by defaulting individuals into plans that are not objectively dominated by options that are offered by the same insurer on the same network," he said.